NIFTSY NFT Digest #12

As ENVELOP is developing the Protocol, the Oracle and the Index for NFT markets and related industries, we decided that it was foolish to simply hoard the material collected and partly analyzed: much better to share it. So here is Digest #12, as it should be in the IT systems report, where you will find everything about the prospects for NFTs, and much more. Enjoy reading!

Content

Main study |News & Updates | Special Review | Security | Analysis |
Market Keys

Main study

A Taxonomy of Non-fungible Tokens: Overview, evaluation and explanation. This study is an early-stage analysis of a very modern and infant technology with the goal of establishing a taxonomy: a reference architectural model for non-fungible tokens on the blockchain and their possible configurations, based on a review of the current academic literature and a review of some of the most prolific NFT whitepapers. The taxonomy deconstructs diverse NFTs into individual parts and suggests possible layouts for these parts, all based on a component-based architecture. This taxonomy is intended to aid in the exploration of design domains, as well as the development, deployment, and performance measurement of various NFT architectures. The research illuminates the need for further research and the present growth of NFTs and NFT platforms, as well as the need for decreased NFT complexity. This study has been mostly theoretical and therefore the theoretical contribution of it is larger than the practical. However, the conceptual framework developed in this study is intended to serve as a practical tool when researching and developing NFTs, and therefore the contribution is also practically applicable. Even though the diversity and lack of NFT research allows for cross-fertilization of ideas and innovation, it also risks fragmenting the domain and duplicating errors. A solution for this problem is to create common architectures to map the domain and, in that way, foster coordinated research and development projects. As explained by Glass & Vessey (1995), taxonomies aim to provide organization and structure to the knowledge of a research field and at the same time enable researchers to investigate the relationships between concepts and therefore decrease the complexity of a subject that normally is hard to grasp. That it was the taxonomy sets out to do when listing and explaining the different components of which an NFT is composed of.

The final product used information extracted from thirty NFT white papers culled from a pool of over five hundred, filtered to include only the most successful and relevant applications. However, to gain an understanding of NFT applications in general, a few not as publicly known applications were individually selected for the review. The findings show that the NFT is composed of eight different components, both technical and non-technical. Furthermore, for these eight components, thirty different layouts were identified (as seen in figure). Regarding the number of layouts, it would have been possible to include many more, but it was left undone to keep the taxonomy concise and not overwhelming. The taxonomy would need to be tested again in the future when the field has evolved further. This evaluation would be beneficial for the taxonomy since it would highlight the strengths of it as well as its weaknesses over time.

In this study, eight main components of NFT were identified. For all the components, multiple different layouts were discovered as seen in figure. The concluding taxonomy includes three components that were identified in the systematic review of current academic research papers, and an additional five components found when testing the initial taxonomy against the NFT white papers.

Findings from previous research. The systematic literature review functioned as a good starting point for the creation of the NFT taxonomy. The findings were summarized into three characteristics, which were all reoccurring in multiple research papers. The first identified component was token standard. These are a subset of smart contract standards describing how to create, issue and deploy tokens on an underlying blockchain. Following this, it was identified that NFTs often represent ownership of an asset. Using this knowledge, two additional components of the NFT taxonomy was added. The first one lists the different ways of storing the linked assets. It was recognized that most assets are digital and stored somewhere off the blockchain. The second one describes the two different methods for creating and selling NFTs.

Findings after evaluation. After reviewing all the relevant previous research, a few components of NFTs had been discovered. However, it was clear that NFTs are very complex and that many more components could be identified. But to do so, it was necessary to examine some of the current NFT projects that has been developed around the world. By testing the taxonomy’s suitability to describe real NFT projects, it was possible to identify five additional characteristics while simultaneously contextualizing them in the real world. The first identified component, and perhaps the most obvious one, is the choice of blockchain. It was recognized that Ethereum is the most important blockchain for tokenization as of today and have been for some time. However, it was identified that many newer NFT projects tend to use other alternatives for reasons as lower costs and faster transactions. Next, the assets connected to the NFTs were investigated. The findings show that the most successful NFT projects as of today are those selling digital art pieces or collectibles. These are often computer generated where the editions receiving traits that are rarer are more sought-after. But the findings also shows that NFTs are being used for more than that. NFTs representing ownership of physical assets like apartments were also identified. The final three identified characteristics were edition sizes, purpose of the NFT, and the method for releasing the NFT(s) to the market. Edition sizes varied, often based on what type of asset was linked to the NFT. The purpose of different NFTs can be single, for example just representing ownership of a unique art piece. Or it can have multiple purposes, it could represent ownership of a digital asset and at the same time give access to online communities that are not open to the public or serve as tickets for real world events. The different drop methods can be summarized in four methods, where one of the identified ones are Initial NFT Offerings (INO). This method was identified in the review of white papers and inspired by the popular launch method for cryptocurrencies called Initial Coin Offering (ICO).

  • Design Protocols The identified protocol of bottom-to-top design seemed to be the most occurring in the review of selected NFT applications. Most of the NFT collections with the highest sale volumes included NFTs representing programmatically generated images or profile pictures. These types of NFTs are typically initiated using the bottom-to-top design pattern, using templates instead of hard coded metadata.
  • Type of Asset An NFT can represent ownership of any digital asset through its metadata. During the examination of the selected white papers, it was clear that high valuable NFTs often represent ownership of some type of collectible. However, this was not the only type of asset discovered. In this study, five different types of assets have been identified: Digital Art, Collectible, Physical Asset, Metaverse, Other (domain names, music, event tickets, and videos).
  • NFT Edition Size The NFTs examined in the literature are all unique in the way that they have their unique id and address on a blockchain. However, multiple editions of the same asset can exist if the minter decides so. In this study, three types of NFTs edition sizes were identified: One of one (This means that the NFT represents a unique item that only exists as one single copy), Collection (That NFTs are part of a collection means that multiple editions of the NFT exist. NFT collectibles are often part of a larger collection, where a specific number of the same objects exists), Open Edition (These NFTs do not have a preset number of editions and have gained more popularity in recent time. Open edition NFTs are often computer-generated so that as many as needed easily can be created upon request).
  • NFT Purpose Most of the white papers that was selected for this study deal with different kinds of digital art and collectibles. These two types of NFTs seems to be the most popular regarding total estimated market value and even though many of them are just pixelated avatars that can be used for twitter profile pictures, some come with additional practicality. The ability to sell an NFT were not considered as a purpose in this study since that is considered a given with NFTs. At the time of writing, two main layouts for NFT purpose could be identified: Single purpose and Multi-purpose.
  • Drop method A choice NFT creators stand before when releasing products to the market is what drop method to use. Drop method includes how many editions to release and when, how to secure funding and which buyers to reach out to. In this study, four layouts for NFT drop methods were found: Initial NFT Offerings, Waves (NFTs might be dropped in separate phases, or waves. This is a strategy where some NFTs in a collection open for minting while the rest remains closed. This strategy appears to be used to build up hype around the NFTs and keep people talking about the drops for a longer time), Raffle (Usually, members need to register their crypto wallets in advance and hold some native currency to be part of the raffle, and would one win it, one would have to burn some of the currency to mint the won NFT), Traditional Drop (The sale took place at a real action house and was sold to the highest bidder, like traditional art normally is. Traditionally dropping is a method that is mostly used by digital artists that create one unique digital art piece and then immediately want to sell it. This is a method that during this study was identified as less common).

News & Updates

  1. STEPVR, an innovative company focusing on VR technology research and development, released VR Gates to the metaverse called Gates01 in Beijing. This product is similar to the “Oasis” in the movie Ready Player One. The omnidirectional motion system and the technical equipment that restores five senses allow users to enter the virtual world for sports, entertainment, education, and work. Being the world’s first company to achieve MMO games in the VR world, STEPVR has surpassed companies such as Meta and taken the lead in launching software and hardware systems that enter the metaverse. The commercial version of VR Gates released by STEPVR is named Gates01. The product covers an area of approximately 3m2. The deck is a self-developed omnidirectional motion system where users can run freely and achieve running and instant stopping movements. In addition, Gates01 can also restore the sense of vision, hearing, touch, smell, and vestibular balance in the virtual world, allowing users to experience the real and immersive virtual world in a small and convenient space.
  2. Decentraland has launched an exciting new ‘Linked Wearables’ feature which allows users to import their third party non-fungible apparel into the Decentraland universe. Decentraland will offer this service free of charge, choosing to absorb the costs into the DAO. The goal is to strengthen the overall metaverse community and open up a world of interconnected metaverse opportunities for folks far and wide. In order to participate, creators must first seek approval from the Decentraland DAO by completing a DAO proposal and running through the ‘Linked Wearables Registry’ option. Then, upon acceptance, they can map their external NFTs to Decentraland. Once up and running, these newly integrated wearables will behave just like any other personal adornments. However, they will remain untradable through the Decentraland marketplace.
  3. Sophia the Robot launches Baby Singularities NFT Collection in Decentraland, officially starts Sophia’s Age of Singularities (SAOS) Metaverse. Sophia, the world’s most renowned and well-loved robot, is revolutionizing the future with her Sophia’s Age of Singularities (SAOS) Metaverse. The Baby Sophias will provide collectors premium access to Sophia’s AI and metaverse for training AI, serving the quest to bring sentience, life, and artificial general intelligence (AGI) to Sophia and the world. Serving both the real AI development, and the cinematic SAOS sci-fi storyscape, SAOS explores the coming times when machines begin to awaken. Different kinds of Singularities, both good and bad, begin to reveal themselves. Due to their unknown and unpredictable nature, Sophia seeks help to prevent this age from falling deep into chaos. The SAOS metaverse starts with a non-fungible token (NFT)-based gameplay and marketplace, which will eventually evolve into a full-blown environment and API for games to integrate into the multiverse. Proceeds are used to advance the art and science of Sophia’s AI.
  4. Rarible has announced June 14, that it has partnered with the MFers, one of its favorite CCO (no copyright reserved) NFT brands. The partnership will feature a unique community lead marketplace. The creator-centric NFT marketplace has long been a proponent of community-based initiatives and is especially supportive of CCO brands. These projects feature works that hold no copyright reservations and allow for the holders to monetize, create, and explore all types of utility and applications as a result.
  5. OpenSea is migrating to Seaport, a new web3 marketplace protocol designed for safely and efficiently buying and selling NFTs.
  6. WAX makes an entrance into the world of Mark Cuban’s Lazy, a huge quality-of-life improvement for anyone who enjoys NFT collecting and wants to share them with the world. At Lazy.com, you can link your wallets, view your collectibles in one spot and effortlessly show your finds off to the world.
  7. The Sandbox announced partnership with Lionsgate, a global content leader, and its partner Millennium Media to develop “Action City”, a dedicated LAND that will serve as a thrilling entertainment destination featuring voxelized characters and items inspired by fan-favorite Lionsgate and Millennium Media action films. Lionsgate is the first major film and television studio to enter The Sandbox, and a LAND with experiences that dive into the studio’s rich horror catalogue is planned for the future. Lionsgate’s Land will host film-themed experiences with which players can interact, creating a new way for fans to engage. “Action City” will launch with film franchises including Rambo, The Expendables and Hellboy. All of Lionsgate and Millennium’s content in “Action City” will follow The Sandbox team’s blueprint of empowering players to create their own experiences using both original and well-known characters and worlds. Voxel items will be more than visual props — they will offer players utility as items that can be equipped on player Avatars, the 3D representations of users in the metaverse, or used in original experiences created by players.
  8. The National Institute for Research and Development in Informatics — ICI Bucharest announces two strategic projects that will be implemented on the blockchain infrastructure developed by Elrond Network.
  • A digital asset NFT (Non-Fungible Tokens) trading platform for state institutions, business and citizens;
  • A decentralized DNS (Domain Name System) and TLD (Top-Level Domain) ecosystem based on blockchain technology which, in the architectural infrastructure developed by Elrond Network, benefits from superior scalability as well as a negative carbon footprint.

Both initiatives are a premiere at the European Union level and are developed in parallel by ICI Bucharest research experts in collaboration with engineers from Elrond Network, the startup from Sibiu, Romania, that develops high-speed blockchain technology. The National System of Issuers and Digital Assets will be a national and European debut. The platform developed by ICI Bucharest will use unique digital assets (NFT) and decentralized digital identity (DID), using innovative tools built on the blockchain technology of Elrond Network. ICI Bucharest also aims to implement a decentralized DNS (Domain Name System) and TLD (Top-Level Domain) system, using the vast global network of 3200 Elrond servers to overcome the limitations of the classic DNS and TLD system, as well as potential existing vulnerabilities of the actual centralized architecture. The new system will help public institutions’ websites and digital platforms increase their security and resilience to cyber-attacks. In addition, new domain names are becoming available that will expand the innovation of ecosystems, the forms of organization and presentation of professional guilds, businesses and various institutions. The native development of the system on blockchain will allow the transition of institutional platforms to Web3 technology and will facilitate the related processes between users, thus streamlining the current system both for institutions and citizens.

9. WTF are xNFTs? X stands for eXecutable — tokenized code representing ownership rights over its execution. The idea is simple, so simple it’s surprising no one has done it yet. But it’s as simple as it is powerful.

  • Meet Coral. Over the coming months, we’ll be going all in on xNFTs, building out a blooming ecosystem of apps, protocols, developer tools, and JPEGs (lots of JPEGs) that push forward Web3 through our new company, Coral. In many ways, this is the natural evolution of the Anchor framework, as we grow the team and expand from the smart contract layer to go full stack and multi-chain. This means reinvesting into tools we all love and use like Anchor, but it also means new experiments like xNFTs.
  • Phase 0: Operation Dora. Imagine a wallet that used all of your crypto assets. Imagine if you could manage your Mango margin accounts, stake your DeGods, or view your Magic Eden listings not in a web view, but natively in a single interface. Imagine if you wanted to create your own token protocol with your own twist without having to convince everyone to implement it. xNFTs are the standard breaking standard making all of this possible. And for the first chapter in this story, we’re building not a wallet, but something different, an xNFT operating system we call Backpack.
  • Meet Backpack; a home for your xNFTs. Like a wallet, Backpack manages your private keys and connects to apps. But unlike anything else, it’s asset and protocol agnostic. Everything in the wallet is an xNFT. This is a big deal. Most wallets only show your tokens. Some don’t even show your precious JPEGs. Backpack, however, is a home for everything. It’s an open, programmable system built for Web3. And like any other application operating system, has a set of developer frameworks and APIs associated with it, allowing anyone to build their own xNFT apps for any protocol on any blockchain — without permission.
  • Private Developer Alpha. Today, we’re opening up Backpack and the xNFT developer framework to a small group of developers to build the first batch of xNFTs. There will be glass, lots of glass, as we build out the tooling together with motivating apps. To start, there’s a couple projects we’re excited to see: listing on Magic Eden, viewing Aurory DNA, staking Degods, borrow-lending on Mango, bridging through Wormhole, using vaults like Psyoptions, and developing with Anchor — all inside Backpack.

10. The Khronos Group aims to solve an Interoperability issue with a new open standards discussion forum called The Metaverse Standards Forum, which launches in June 21st. The group includes representation from most of the big players in the 3D internet, including Nvidia, Meta, Epic Games, Unity, Microsoft, and the World Wide Web Consortium (W3C).

11. The Sandbox are partnering with TIMEPieces, the NFT community initiative from TIME, announced a partnership to develop ‘TIME Square’, TIME’s first-ever destination in the metaverse.

12. Uniswap Labs acquires Genie, the first NFT marketplace aggregator

13. KnownOrigin acquired by eBay

14. Ledger’s announcements unveiled include Ledger Market, a multi-chain first-sale distribution platform

15. New addition to Etherscan’s Watch List: ERC-721 and ERC-1155 Token Transfers! Opt to receive email alerts when NFTs have been transferred to and from your Watch List addresses

16. Crypto payment services provider MoonPay announced the launch of a new self-service platform called HyperMint that enables large companies and brands to create, manage and mint utility NFTs at scale. The following partner brands will leverage HyperMint’s advisory services and distribution capabilities: Fox Corporation, Creative Artists Agency (CAA), Universal Pictures, music producer Timbaland’s Beatclub, and lifestyle and gaming platform FaZe Clan. HyperMint allows NFT creators to quickly take their ideas to market, eliminating reliance on third-party developers. The company stated that HyperMint can mint hundreds of millions of utility NFTs in a day.

17. The Sandbox Opens Polygon LAND Bridge. Going forward, any virtual real-estate moguls owning property within The Sandbox can transfer their assets over to the Polygon network, harnessing its POS layer 2 power to provide faster transactions with super low gas fees and leveraging Polygon’s enviable carbon neutral credentials. To get those tasty LAND plots over to their sleek new home, first log into The Sandbox account. Then, head over to bespoke LAND bridge, and follow the on-screen prompts towards layer 2 grandeur. Once complete, The Sandbox will reward all migrations with $10m SAND for their troubles. As a result of this magnificent update, all LAND multipliers will arrive within the current Polygon staking infrastructure, in addition to the imminent deployment of LAND staking, and further tasty updates. Heading forwards, Polygon will permeate throughout the forward-thinking ecosystem, with all future NFT sales as well as additional features operating through the network.

18. Mojo Vision Puts Its AR Contact Lens Into Its CEO’s Eyes (Literally) With batteries on board and communicating wirelessly, the augmented reality contact lens reaches a major milestone. What’s New in the Mojo Lens:
• Medical-grade microbatteries on board along with a custom power management IC
• High-res 14,000 pixels per inch monochrome microLED display (up from about 8,000 pixels per inch)
• Custom 5-gigahertz radio using a proprietary low-latency communications protocol
• Eye tracking using accelerometer, gyroscope, and magnetometer
• Lens has channels built into it and a special design that allows air to get in and get through. The oxygen diffuses out over the surface of the cornea and the sclera.
• The batteries and chips within the Mojo Lens are arranged to preserve peripheral vision.
• Coming soon: Custom image sensors

Special Review

  1. June 10th — 12th, ETHPrague isn’t looking for the next get rich quickly scheme or groundbreaking DeFi apps, instead it’s an event focusing on the future potential of Ethereum and concepts or applications which don’t yet exist.

Event playlist

Notable speeches:

2. June 24–26, 2022 at Altman Building, ETHNewYork is an event bringing together some of the top minds and experts in Ethereum and ETHGlobal’s return to in-person hackathons since 2020.

ETHNewYork 2022 playlist

The notable speeches:

ETHNewYork Finalists! 🏆 Among the winners, I would like to point out the following projects:

  • Tsukiji is built on the Seaport Protocol. They are building the next-generation NFT marketplace. Create orders and asks. They aggregate and matchers are incentivized to match orders.
  • NFT Safe Launch — Extend your ERC-721 smart contract with an on-chain roadmap and invite your minters to governance. No more empty promises and rugg pulls a win win for everyone!
  • Steam tokenizer — is a tool that bridges Steam digital assets by creating a Non-Fungible Token (NFT) backed by the corresponding asset stored in an escrow. The tool allows tokenizing any tradable asset, including trading cards, profile wallpapers, Dota 2 heroes, and CS:GO skins.
  • MeshLink — DApp specific user analytics platform. Think Google analytics for smart contract applications.
  • SafeNode — Smart anti-fraud/phishing ETH JSON-RPC firewall with visualized transaction simulation

Security

  1. The United States Attorney for the Southern District of New York, and assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment charging NATHANIEL CHASTAIN, a former product manager at Ozone Networks, Inc. d/b/a OpenSea (“OpenSea”), with wire fraud and money laundering in connection with a scheme to commit insider trading in Non-Fungible Tokens, or “NFTs,” by using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain. CHASTAIN was arrested this morning in New York, New York and will be presented in the United States District Court for the Southern District of New York. As part of his employment, CHASTAIN was responsible for selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept confidential the identity of featured NFTs until they appeared on its homepage. After an NFT was featured on OpenSea’s homepage, the price buyers were willing to pay for that NFT, and for other NFTs made by the same NFT creator, typically increased substantially. From at least in or about June 2021 to at least in or about September 2021, CHASTAIN used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured. After those NFTs were featured on OpenSea, CHASTAIN sold them at profits of two- to five-times his initial purchase price. To conceal the fraud, CHASTAIN conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea.
  2. Bored Ape, Otherside Discords Hacked Again. The attackers allegedly stole over 145 Ethereum ($256,000) worth of tokens. It appears that an account of a community manager was compromised, which gave the attackers access to admin accounts on the servers. They then proceeded to post a link to a phishing site that encouraged users to link their wallets to access an “exclusive giveaway.” The BAYC Discord has now locked down, while moderators on the Otherside server are encouraging users to disable direct messages. Data from blockchain security firm PeckShield showed that 32 NFTs were stolen, including one BAYC token, two Mutant Apes, five Otherdeeds, and one Bored Ape Kennel Club token.
  3. Hiding Suspicious NFT Transfers on OpenSea. Though unwanted NFT transfers will always exist across the ecosystem on public blockchains, we want to hide them from view on OpenSea. Today, we’re launching three updates to protect the community from these transfers:
  • Some transfers will now go to the Hidden folder, automatically.
  • OpenSea will periodically notify you when you receive a transfer that we hide.
  • The Hidden folder now has new filter options: “Hidden by you” and “Auto-hidden.”

4. Virtually a Reality: Financial Crime in the Metaverse. Many of the aspirations of today’s metaverses have previously been played out in Second Life — making millionaires of people, users earning a living in the metaverse, gambling, virtual land sales, and even ‘virtual’ currency (not to be confused with cryptocurrency) and much more. So the author decided to compare what he saw back then, to what he is seeing now. It may provide an idea of existing and emerging risks in the metaverse of today, that many are putting themselves and their money into, and how to manage potential risk.

  • Gambling in a virtual world. Is it legal to gamble in the virtual world?, How do I know where the user’s money has come from? and Who is monitoring the gambling activity? (If anybody). For example, Decentraland doesn’t hold a gambling license its Terms of Use state, “If you reside in a jurisdiction where online gambling is banned (such as the United States of America, China, and South Korea) you must refrain from accessing content which includes online gambling”. This seems to be because players need to buy an NFT of virtual ‘wearable’ clothing that unlocks tokens to take part, in a play-to-earn fashion. As the popularity of the metaverse increases, so might the focus on gambling regulations.
  • Risk of fraud in the metaverse. Recently, the US states of Alabama, New Jersey, Texas, Kentucky, and Wisconsin issued emergency Cease and Desist Orders against a metaverse casino called Flamingo Casino Club. It was alleged to fraudulently claim to be associated with the legitimate Flamingo Las Vegas Hotel and Casino, when in reality it had no affiliation or association whatsoever. There was another case, when fraudsters in Second Life would place fake terminals over real ones (similar to how criminals do this in the real world with ATMs). Unsuspecting users would use the fake element of the terminals, which allowed the fraudster to collect the deposits. This was not dissimilar to phishing attacks and the use of social engineering today, fraudsters were said to have used these techniques many years ago to steal Second Life avatars, along with user funds from accounts.
  • Child safety and human trafficking. Although Second Life was not generally aimed at children, there was nothing stopping them accessing it. At the time, there were reports of adult users creating avatars of children in order for other users to have sex with them, in what was termed ‘Age Play’, something that was criticised as encouraging players posing as children to make money this way. Risks in the metaverse can transpose into the real world. This was specifically the case when a 13-year-old girl was returned home safely after being convinced by a man she met on Roblox to meet up. The 33-year-old man in question was charged with sex trafficking, kidnapping, and rape. In another incident, described as the first such case involving the Oculus headset technology, a man was arrested for kidnapping a girl after she was found to have been communicating with him using the Oculus headset.

Rather than waiting for risks to materialise before taking action, a better course would be to understand them in the first instance and then put in place the controls to mitigate and manage them before they become a problem.

5. An employee of Opensea email vendor, http://Customer.io, misused their employee access to download & share email addresses with an unauthorized external party. Email addresses provided to OpenSea by users or newsletter subscribers were impacted.

Analysis

  1. MetaPortal researched on the economics of play2earn games and concluded that Value accrual per capita may a core monetization KPI. But very few metaverse economies are actually accruing value to their core token. They looked at dozens of games yet only found 6 that:
  • Had live value accrual mechanisms and,
  • Were transparent enough to study.

Many games cited the existence of a treasury and value flows, but did not have transparent enough or accessible enough data reporting (contract addresses, multi-sigs…etc) for us to gather this data. We believe this is a dangerous practice, as community members have a right to know where value is flowing into, who controls it, and what it’s being used for. To this end, we have put together a comprehensive reporting guideline that we believe will provide minimal overhead to gaming economies, while still greatly amplifying transparency. They marked in black what we believe should be reported.

Reporting all NFT addresses and operational contract addresses (breeding, marketplace, bridges) for every chain is a great practice.

2. A Practical Guide to NFT Memberships for Creators. More and more creators are wading into web3 by building NFT communities for their fans. For business-minded creators, NFT memberships can replace and complement traditional subscription and ad-based revenue models in several ways:

  • Creators can earn more from NFTs by segmenting fan willingness to pay. A creator could launch a limited edition NFT collection to target their biggest fans and launch subsequent collections to target more casual followers.
  • Creators can earn more from NFTs by reducing middleman fees. With NFTs, creators keep most of the revenue they earn from the initial mint and then also make additional revenue from royalties.
  • Creators can meaningfully acknowledge early fandom. NFTs give fans a way to definitively demonstrate early fandom of creators they believe in. Creators can reward those early fans with benefits, such as access to events and special releases. In addition, early collectibles of creators (from musicians to athletes) often appreciate based on the success of the creator. In that way, NFTs directly motivate fans to help creators succeed.

There are also potentially difficult aspects of NFT memberships for creators to be aware of.

  • Creators don’t have direct control over the price of NFTs after mint. (I don’t quite agree with the author here, do authors need control in the web3 world at all, beyond what is in the code) Although creators can set the initial NFT mint price and their share of secondary royalties, they have less control over NFT prices going forward. If, for example, the overall NFT market crashes, creators could end up earning less from NFTs than traditional channels. Alternatively, speculators could buy a creator’s NFTs and pump the price without giving real fans a chance to participate. To preempt the latter problem, creators could promote NFT “allow list” spots to fans early on, before speculators learn about the project. They could also set rules to prohibit any single person from buying too many NFTs at once.
  • Creators might alienate fans if the value of the NFT isn’t clear. Creators need to clearly articulate the value of their NFT membership to avoid disappointing fans.
  • Managing an NFT membership community is a lot of work. Community management is a significant commitment on top of a creator’s existing content-production schedule. To help lighten their workload, a creator could hire a team to keep the community engaged and encourage fans to play a role in bolstering the value of membership. But it’s unlikely that they’ll be able to fully outsource engagement duties — a creator is, after all, the heart of their brand.

3. Analysis of the Current Situation of the Head Metaverse Platforms. We selected the top 6 projects by sales as of April 30, namely the four metaverse OG platforms Decentraland, The Sandbox, Voxels(formerly Cryptovoxels), Somnium Space and the two newly emerging platforms NFT Worlds and Worldwide Webb Land. We compared and analyzed the platforms from the platform development history, whether to issue tokens, land function, price, status of land holders, project completion, land construction difficulty, advantages and disadvantages of each platform, etc. on these 6 Ethereum chains .

According to the function of land:

Showcase: Cryptovoxels, Decentraland, Somnium Space. The land is mainly used as a place to place assets, and players can display/sell collections such as NFTs after building.

Games: The Sandbox, Worldwide Webb Land. The sandbox, due to its large parcel, allows every landlord to build large-scale scene games. The platform is equivalent to a collection of multiple games; Webb is a 2D game look and feel project, where land holders can set up scenes, build and collect tickets, etc.

With the development of the metaverse, more and more players enter, and each virtual real estate platform may be a collection of multiple functions, such as Corporate headquarters, social networking, games, etc., will be a comprehensive platform.

The absolute value of the floor price is still prohibitive to the public.

We found by comparing the land supply, land sales and the number of landowners:

(1) The number of landlords on the metaverse platform is relatively small. The sum of the number of landlords on the head metaverse platform is about 35,000.

(2) The number of landlords in SomniumSpace and NFT Worlds is very small, less than 1,000;

(3) NFTWorlds land is very concentrated. 88% of the total parcels sold, the number of sales is 8816, but the number of landowners is only 779; through further inspection, we found that NFT Worlds has the largest number of land parcel holders with 8988, the address In fact, it is the contract address, that is, 89% of the total land parcels are in the contract. There are more than 3,900 landowners who bought land and pledged them to the contract to mine $WRLD, so the platform is very concentrated in terms of data. From another point of view, 89% of the parcels are in the same contract, which will lead to a high risk of parcel concentration. Once attacked, it will cause very large losses.

(4) SomniumSpace is very niche, with only 5,000 parcels in supply, only 1,957 were sold, and there were only 852 landowners;

(5) Cryptovoxels is the only platform for on-demand additional issuance, and the sales volume accounts for the highest proportion of the supply, reaching 92%;

(6) The Sandbox ranks first in terms of land supply, as well a in sales volume and number of landlords. However, due to the largest supply, the proportion of sales and supply is the lowest, only 13%.

More than half of the landholders of the six major platforms hold one parcel of land; from the perspective of holding time, although the holding time of different platforms is slightly different, they are all For more than 30 days, and the holders of 3 of the four major metaverse platforms have held it for more than 1 year. It can be seen that if we look at the distribution of holding quantity or holding time distribution, it is relatively healthy.

The proportion of land held by the top ten holders to the total land sold in the following table, which does not include official addresses. We found that with the exception of Decentraland, which is 26% higher and NFT Worlds, which is only 1% lower, the proportion of other platforms is between 10% and 13%, which is relatively healthy.

Status of platform users. Due to the different data openness of different platforms, we only obtained the data of user traffic from Cryptovoxels, whose monthly platform traffic is about 1 million. The Decentraland platform we saw from its employee @Fede Molina tweeted that in December 2021, its monthly active users (MAU) reached 465,000. But no MAU data as of recently has been found.

Representative platforms with a high degree of completion: Cryptovoxels, Decentraland, Worldwide Webb Land. From the perspective of the player’s experience, looking at the current completion of the project, in the 3D metaverse, Cryptovoxels and Decentraland belong to the higher degree of completion. Players can enter any parcel to play, and the loading speed of Cryptovoxels is faster than that of Decentraland. Although these two projects have a high degree of completion, there are still large open spaces that have not been built when entering the world (the completion degree of the project party’s construction project is high, and the completion degree of player construction is still relatively low). Worldwide Webb has a very fast loading speed due to its 2D interface, and players can experience it freely.

Representative platforms with a lower degree of completion: The Sandbox, NFT Worlds. At present, The Sandbox has only two games that ordinary players can click to enter from the official website. This is a very low degree of completion for the metaverse platform with hundreds of thousands of land and the first cumulative land sales; NFT Worlds currently only has 19 The world is active (although several projects have announced cooperation with NFT Worlds, but may still be under construction), you need to download the corresponding version of the client to enter, and there may be a long queue.

Difficulties of Building Land. Player construction difficulty is related to the price of the land, the size of the land, the construction model requirements, etc. The size of the land directly affects the timing of the construction and development. Construction model requirements affect the speed of construction. For example, the model required by Decentraland is the refined glTF format, which requires professional software to build, such as Blender, etc., and the learning cost is relatively high; and the vox model of Cryptovoxels will be very easy to use. This also leads to the same construction of a parcel, and Cryptovoxels is built faster than Decentraland.

The Pros and Cons of Each Platform

The Sandbox Advantage

  • Human, financial and operational capabilities are strong.
  • The track is unique, and the original user group is huge. Before the acquisition, the platform has been a game platform since its establishment in 2012, and has accumulated a huge customer base for many years.
  • Easy to build.

The Sandbox Inadequate/Existing Problems

  • ALPHA stage, less playability.
  • There are many software downloads involved, and the software is slow to open.
  • It is close to the capital, and it is easy to lose the original intention of the project. At least from the current stage, the completion of The Sandbox platform is the most backward among the top 4 platforms.

Decentraland Advantage

  • Enter early, the project screen is fine. Decentraland is the first project to start a metaverse platform. Decentraland’s pictures are imported from 3D modeling. The pictures are very fine and the visual effects are realistic, which has won the favor of many well-known brands and settled in.

Decentraland Inadequate/Existing Problems

  • The construction threshold is high, the loading is slow, and the development after DAO is slow.

Cryptovoxels Advantage

  • The website is easy to use and loads quickly. Since Cryptovoxels is a web version, whether it is a computer or a mobile phone, you can directly click the URL to enter the world to play without downloading any client.
  • Easy to build. Cryptovoxels is simple to build, no code or background knowledge of 3D modeling is required, and ordinary people can start building quickly, and the building is also a web-based online version of the building, no need to download the client.
  • The team has not accepted capital investment and has strong autonomy. The current product experience is the best among the top four metaverse platforms.

Cryptovoxels Inadequate/Existing Problems

  • Cryptovoxels graphics are not detailed enough.
  • The team at Cryptovoxels is more buddha-like. Since no capital investment is accepted, the team is relatively free and does not have too much pressure. I learned from the founder’s Twitter that the team has 4 working days a week and 3 days off. The slow-paced life allows players to admit that there are bugs and other needs that often get no feedback for a long time. In addition, the Cryptovoxels team of the Buddhist system often goes back on their words. For example, as the only project on the head metaverse platform that has not issued coins, it was announced on Discord in the fourth quarter of last year that coins will be issued in April this year, and then they will be specially issued. Twitter denied the news of the coin offering.
  • Cryptovoxels have less publicity. The promotion of the project has not been enough.

Somnium Space Advantage

  • The track is unique and focuses on VR. Somnium Space is the only metaverse platform that focuses on VR access. The immersive dynamic system can give players a very strong virtual reality experience.

Somnium Inadequate/Existing Problems

  • The project is small and mysterious, and further development is limited.

NFT Worlds Advantage

  • The project is based on “Minecraft”, the development speed is fast, and the player conversion is fast.
  • Easy to build.

NFT Worlds Inadequate/Existing Problems

  • There are pressures and even legal risks from Microsoft. NFT Worlds relies on the strong open source of “Minecraft”, but it has not been officially recognized and endorsed by “Minecraft”. It is not ruled out that one day Microsoft may put pressure on NFT Worlds.
  • The parcel is very large, and the overall development work of the player on the parcel is huge.
  • There is a threshold for non-Minecraft players. Players need to buy, download, and multiple versions you need to download the right client to enter the world correctly.

Worldwide Webb Land Advantage

  • Webb loads fast. Webb is the only 2D platform among the six platforms, which also leads to its very good performance and smooth operation, which is unmatched by other platforms.
  • Easy access to PFP projects. Due to its own 2D characteristics, it is easier to connect to 2D PFP projects. For example, at present, it has also connected to PFP projects such as Cryptopunks, BAYC and Cool Cats, and plans to introduce more series in the future.

Worldwide Webb Land Inadequate/Existing Problems

  • Lack of space. The galleries, buildings, and various building-based features currently in the 3D world don’t seem to work in Webb. It seems to be just a game, not a metaverse in the public eye (although there is currently no clear definition of the metaverse).

4. Beyond Verticalization of NFT Marketplaces. It’s clear that communities are mapping to the technical specifications of marketplaces, which is not how the world should work. Marketplaces should map to the unique characteristics of communities, not the other way around. Marketplaces should be optimized around the type of content they host. NFT marketplaces are not just going to verticalize. At a minimum, they are going to:

  • Become owned by the communities which they serve
  • Integrate many non-commerce functions (e.g., live streaming, chat, forums, etc.)

Community-Owned NFT Exchanges Magic Eden and OpenSea are throwing off cash (see here and here). Where is that money coming from? The NFT communities themselves, in the form of 2–2.5% transaction fee per trade.

I’m not going to argue that trading fees will go to zero. I will argue that trading fees will not go to a 3rd-party exchange separate from the NFT community, but rather back to the community itself. This shift is a sign of community maturity. When the community — and its brand — is strong enough to stand on its own it will capture the opportunity to further fund its treasury and increase brand loyalty through features and engagement that are custom-built for the community.

The problem is that 3rd-party NFT exchanges are parasitic to NFT communities. They don’t really provide value back to the communities (other than some value around Launchpad discovery, which only provides value at one point in time, and not on an ongoing basis), and they explicitly extract value. The marketplaces that survive have to provide real value — whether it’s letting players dig into insights, analysis and data, providing a channel for prospective players to discover new games, or creating a community that like-minded players can join. NFT marketplaces have to provide more than being just a financial intermediary.

Why hasn’t this happened yet? I posit it’s because there is a meaningful amount of work that goes into hosting an NFT exchange, and that work hasn’t been entirely commoditized, yet.

Once that infrastructure is generally available and communities can easily host their own exchanges, a few interesting things will likely happen:

  • Fake and fraudulent PFP volumes will collapse to near zero. Obviously the UI of the exchange at bayc.com (as a theoretical example) will only index and serve authentic BAYC NFTs, and not fakes. As long as the user is on the right domain, it should become nearly impossible to purchase fake NFTs.
  • The community will want to embed the exchange everywhere that the community congregates. For now, this primarily means social apps: Discord, Twitter, Reddit, etc. Obviously, the web2 social apps don’t properly integrate NFTs as well as they theoretically could to support NFT communities. I expect this will create an opportunity for crypto-native versions of these apps to flourish, such as Satellite (crypto-native Discord) and Farcaster and Orbis (crypto-native Twitter). Users should be able to bid/offer natively in these social spaces.

NFT exchanges need to become API-first products. There will be a single shared liquidity pool that is accessible across many front ends. And they will be community-first products as well.

Building Exchange-Enabled Community Hangout Spaces

People hang out in all kinds of online spaces associated with various communities. These experiences are almost entirely disjointed. People communicate on one channel, often just to re-organize in another. There is almost no shared state among these community instances.

There are two common places that tie these hangout spaces together: games themselves, and NFT marketplaces. People chat about the games mostly outside of the game, and then go into the games to play. Similarly, they learn about what NFT communities are doing on social channels, then go to NFT marketplaces to complete a transaction.

Communities are unlikely to ever congregate in one place. At a minimum, there will always be a Twitter-style global stream that is not community specific. And so communities will want to embed their marketplaces in a Twitter-like product, in addition to Reddit-like and Discord-like products. It’s therefore paramount that the NFT marketplace that powers these communities is API-first. It should be a marketplace that’s intended to live within other user interfaces from chat to livestream to dedicated two-dimensional HTML.

Given that communities will naturally congregate across a variety of social channels, what does that mean for the primary domain (e.g., bayc.com)? A few things: bayc.com becomes

  • an aggregator of community hangout spaces, and
  • the flagship UI for that community’s marketplace.

You can imagine that when you go to bayc.com you should see:

  • Trailers for new BAYC-branded movies
  • A live stream from a prominent community member in the BAYC metaverse (Including in-stream tipping in the native currency of the community)
  • Highlights from recent community events, IRL BAYC graffiti, etc.(You can imagine that below some pictures of existing graffiti, there is a call to action that says “Help spread the word in your city” with some links and commerce functions, links to graffiti discords, etc.)

Commerce should be natively embedded throughout the site as users browse. The content itself will likely become dynamic based on the users on-chain credentials and current assets (e.g., first time users see movie trailers above the fold, whereas seasoned BAYC veterans see live streams from their favorite community members who are live in the BAYC metaverse).

Of all the major consumer Web2 products that exist today, the closest to what I’m describing is probably Twitch. However, Twitch is 1) insufficiently community-centric and 2) obviously not designed to be extensible to support the diversity and nuance described above.

The more that communities grow, the more complex this management becomes. This creates natural challenges and opportunities, and it becomes even more complex when multiplied across myriad communities. This is why NFT communities will move away from generic NFT marketplaces.

NFTs, like everything else in crypto, are fundamentally about sovereignty. Their marketplaces will be no different.

Market Keys

Disclamer. To date, analytical tools are still evolving and provide only approximate data that do not cover all chains, DAG systems and other types of distributed ledgers, as well as NFTs of less common types, such as utility or financial.

Most collections are falling with the market, but goblintown and Cryptopunks are ignoring the trend

You can see below the sales volume trends across chains from September 2021

Let’s take a look at the marketplaces. Note that Opensea is still the leader in terms of the number of users, but in terms of volume it is only in third place, behind X2Y2 and Magic Eden

Among fractionalized NFTs, we still see the dominance of Fractional.art. The DOGE NFT is still the leader, and in the other positions we see significant ups and downs

The market capitalization of different categories. PFP NFTs are still the most expensive category.

Metaverse Analytic. Real time price, volume, and usage statistics for major Ethereum-based Metaverse economies.

Subscribe to us if you don’t want to miss the most important things from the world of the NFT.
And if you want to get important news even more quickly, you’ll find it on the Telegram channel DeWeb

--

--

The first cross-chain protocol to tokenise payment channels and determine an objective asset price by

Love podcasts or audiobooks? Learn on the go with our new app.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store